Specialist Fabian Caceres works on the floor of the New York Stock Exchange on Jan. 30. / Richard Drew, AP

by Staff and wire reports, USA TODAY

by Staff and wire reports, USA TODAY

NEW YORK (AP) â?? Major U.S. stock indexes drifted lower Thursday, backing away from new highs.

At the close, the Dow Jones industrial average was down 49.84 points, 043%, to 13,860.58 for the day. The Standard & Poor's 500 closed down 3.85 points, 0.3%, to 1,498.11, while the Nasdaq composite index reversed course late in the trading session and ended down less than a point at 3,142.13.

The Dow gained 5.8% in January and the S&P 500 jumped 5.1% for the month. Both indexes are within shouting distance of setting all-time highs although it may be months before the records are broken.

Investors are applauding the month's gains because January has a longtime track record of setting the tone for the year's stock market performance. However, on the first trading day of February, all eyes Friday will be on the January employment report due out from the Bureau of Labor Statistics at 8:30 a.m. ET.

The Dow has gained in the month of January three years in a row, and this year's performance is the best since the indexed surged 8% in 1994. The S&P's gain is the best monthly performance since 1997.

"The market is getting ahead of itself," said T. Doug Dale, chief investment officer at Security Ballew Wealth Management. "If I'm looking at what the upside is from here, relative to the potential downside, I'd say it's unfavorable to the upside."

January's rally slowed Wednesday after a report showed that the economy unexpectedly contracted in the fourth quarter last year. Stocks have been rising after lawmakers reached a budget deal to prevent the U.S. from going over the "fiscal cliff," and on optimism that the housing market is recovering and firms are slowly starting to hire.

More government reports Thursday gave investors a better picture of the health of the economy.

--The number of Americans seeking unemployment aid rose sharply last week but remained at a level consistent with moderate hiring. Weekly applications for unemployment benefits leapt 38,000 to a seasonally adjusted 368,000, the Labor Department said Thursday. The increase comes after applications plummeted in the previous two weeks to five-year lows.

--Consumers increased their spending in December at a slower pace, while their incomes grew by the largest amount in eight years, a report showed on Thursday. Consumer spending rose 0.2% last month, at a slightly slower than the 0.4% increase in November, the Commerce Department said.

Stocks got a small boost Friday after the Chicago Business Barometer for January came in at 55.6, a higher reading than analysts had forecast, according to data provider FactSet. Readings above 50 indicate that economic activity is expanding.

The yield on the 10-year Treasury note, which moves inversely to its price was little changed at 1.99%.

Among other stocks making big moves:

--Qualcomm, a maker of chips for mobile devices, rose after company said late Wednesday that its net income surged in the final quarter of 2012, boosted by growing global demand for smartphones.

--Facebook fell after reporting fourth-quarter earnings late Wednesday. Earnings were better than Wall Street's expectations, but the stock dropped as investors placed more significance on the company's growing expenses.

- United Parcel Service fell $1.61 to $79.65 after is said that it was slowed down in the fourth quarter by weak global trade and a disappointing holiday-shopping season. The company is also forecasting 2013 results that are below analyst's expectations.

- JDS Uniphase added $2.29 to $14.69 after the technology company reported stronger-than-expected earnings on improved revenue and margins late Wednesday.

Contributing: USA TODAY's Kim Hjelmgaard, The Associated Press

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